IATA has revised its profitability projections for airlines in 2024, showing stronger figures compared to previous forecasts in 2023. Despite the improvement, the industry still struggles to achieve a return above the cost of capital.
In 2024, net profits are expected to reach $30.5 billion, marking a slight increase from the estimated $27.4 billion in 2023. This improvement aligns with the increase in operating profits, which are projected to rise to $59.9 billion. The industry is also expected to achieve a record-high total revenue of $996 billion, but this will be matched by similarly high total expenses of $936 billion. The number of passengers is predicted to reach an unprecedented 4.96 billion, and air cargo volumes are expected to hit 62 million tonnes.
Willie Walsh, IATA’s Director General, highlighted the significance of these figures, especially considering the losses endured during the pandemic. He noted that with nearly five billion passengers expected in 2024, the demand for air travel remains robust. However, he emphasised that despite the industry’s recovery, profitability remains fragile, with a return on invested capital of 5.7%—still below the over 9% cost of capital. Walsh also pointed out the thin margins, earning just $6.14 per passenger, which underscores the need for addressing supply chain issues and reducing regulatory burdens to improve profitability.
Revenue growth in 2024 is expected to outpace expense growth, leading to stronger operating profits. Passenger revenues are projected to rise to $744 billion, with passenger demand continuing to grow, particularly over the long term. However, the average return airfare is expected to be significantly lower than in 2019, reflecting the increasing affordability of air travel.
The global fleet is expected to consist of 38.7 million flights in 2024, slightly below previous estimates due to supply chain disruptions. Larger aircraft are being deployed as a strategy to mitigate the slower pace of aircraft deliveries.
Regional outlooks vary, with North America contributing significantly to industry profits due to high passenger load factors and robust consumer spending. Europe’s performance remains strong, though supply chain issues and labour disputes could pose challenges. Asia-Pacific is expected to drive much of the global passenger growth, particularly in domestic markets, while Latin America continues to recover, supported by strong sales growth in key countries. The Middle East benefits from economic strength and strategic investments, though geopolitical risks could impact certain carriers. Africa, despite challenges, is expected to maintain profitability due to sustained demand.
Public sentiment towards air travel remains positive, with 97% of travellers expressing satisfaction in an IATA poll. The majority believe air travel is crucial for the economy and society. Additionally, there is strong support for the industry’s goal of achieving net zero carbon emissions by 2050, with a high level of confidence in aviation’s commitment to sustainability.
Avation PLC (LON:AVAP) is a commercial passenger aircraft leasing company owning a fleet of aircraft which it leases to airlines across the world. Avation’s future focus are new technology low CO2 emission aircraft.
